Ixia has re-filed its 2013 financial reports, bringing the company closer to being current with its Securities and Exchange Commission filings after the resignation of its CEO and CFO led to discoveries in accounting mistakes.
No willful violations were found, but the company’s CFO resigned last March after a financial review found that there were errors in the timing of its revenue recognition practices that led to some revenue being prematurely counted. The review was prompted by the discovery that former CEO Vic Alston had falsified his credentials, including details of his education, age and early work history.
Ultimately, both Alston and CFO Tom Miller were cleared of any intentional financial misconduct. However, the investigation criticized Alston’s leadership for setting an “aggressive” tone that, along with a lack of resources and training, contributed to the incorrect financial record reporting.
According to Ixia, the amendments to the two previous quarterly results included:
- For the quarter ended March 31, 2013: reduced total revenues of about $1.3 billion; increased deferred revenue of $1.3 million.
- For the quarter ended June 30, 2013: reduced total revenue of $3.9 billion, and increased deferred revenue of $5.2 million.
Ixia said its management is now focused on getting the company’s report for the first quarter of 2014, at which point the company would be current with SEC filings. Ixia had been warned by Nasdaq by the late filings put the company in danger of delisting; Ixia has presented a plan and asked for an extension to regain listing compliance. Ixia is not holding a conference call since it hasn’t filed first quarter results yet, but anticipates filing that report in July and will hold a conference call then.
In a statement, Errol Ginsberg, chairman and acting CEO of Ixia, said that the company hopes to name a permanent CEO and CFO by the end of the third quarter.
“While the past eight months have been challenging on several fronts, we have continued to focus on innovation and on executing and moving the business forward,” said Ginsberg.
While warning that Ixia is still in the early stages of accounting for its first quarter financials, Ginsberg said that the company expects first quarter revenue to be between $109-113 million.
Ixia’s reported fourth quarter numbers included:
- Total revenue of $120.6 million, down from $125.5 million in the same period in 2012.
- The quarter included $4.8 million in revenue from Ixia’s acquisition of Net Optics, which provides network monitoring and security solutions. Ginsberg said that the integration of the new company is already “substantially complete,” but that the transition impacted bookings due to a major restructuring of leadership and new hires in the company’s sales force.
- Net loss was $3.1 million, compared with profit of $3.7 million in the 2012 fourth quarter.
For the full year of 2013, Ixia saw total revenues increase 13% year-over-year, and net income of $11.9 million, down from $45.5 million in 2012.
